Contra Fund or Value Fund – Which Is Better?

Contra Funds are those funds which invest in stocks which are not performing very well at a particular point of time. In other words, investing in these funds involves investing in funds which are presently neglected by the market but have strong fundamentals and asset values. Therefore, these funds do have the capability to make a comeback and perform better in the long run.

As the name suggests, value funds are those funds which seek to provide value to the investors. These funds usually invest in stocks which are presently undervalued but have the potential to provide great returns in future. These funds are based on the principle that due to some temporary setbacks, the stocks are undervalued presently but will regain its worth in future.

Contra funds are often neglected by the market because most investors refrain from buying such funds. However, contrary to the popular belief, the contra funds representing a fundamentally sound company can generate very good returns in future.On the other hand, value funds are identified as stocks of companies which have good fundamentals and therefore, possess high capability of providing good returns in future. These funds are undervalued at a particular time because of a temporary setback in the market. Usually, value funds consist of stocks from Bluechip companies.Both contra funds and value funds may help you to invest in a sound business and therefore, generate good returns in future. However, while investing in contra funds, you need to be diligent and smart with your choices.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.